What is CSRD?
The Corporate Sustainability Reporting Directive (CSRD ) is a European Union directive that aims to improve the transparency and accountability of corporate sustainability. It was signed on June 21, 2022, and passed in Parliament in November 2022. It will require companies to include information on their environmental, social and governance (ESG) impact in their financial reports.
The CSRD will come into force in 2024 and will apply to various companies, which will have to include information on their sustainability performance in their annual reports. Companies will also have to establish a sustainability strategy and materiality analysis to identify the most important topics for their business.
What is it for?
The Corporate Sustainability Reporting Directive (CSRD) aims to improve the transparency and accountability of companies with respect to sustainability. By requiring reporting companies to include information on their environmental, social and governance (ESG) impacts in their financial reports, the CSRD aims to facilitate informed decision-making by investors and promote better risk management of corporate environmental and social impacts.
By including sustainability performance information in annual reports, the CSRD provides investors and other stakeholders with a better understanding of corporate sustainability risks and opportunities, which can help them assess the company's long-term prospects and make informed decisions.
In addition, the CSRD contributes to the European Union's objective of promoting a sustainable and responsible economy, by encouraging companies to take into account the environmental and social impacts of their activities and to adopt more sustainable practices.
Finally, CSRD has an impact on companies themselves, enabling them to identify sustainability risks and opportunities, integrate them into their strategy and communicate them effectively to their stakeholders.
Who is concerned?
| Date of exercise | Date reporting | |
|
Large companies with more than 500 employees that meet 1 of the 2 criteria:
|
2024 | 2025 |
|
Companies with more than 250 employees that meet 1 of the 2 criteria:
|
2025 | 2026 |
|
Publicly traded SMEs that meet 2 of the 3 criteria:
Credit institution :
Captive insurance companies |
2026 | 2027 |
|
Non-European companies :
|
2028 | 2029 |
What sanctions?
Sanctions for non-compliance with the Corporate Sustainability Reporting Directive (CSRD) vary among EU member states. In general, sanctions may include financial penalties, administrative sanctions and legal proceedings.
Financial penalties can range from a few thousand euros to several million euros, depending on the severity of the non-compliance. Administrative sanctions can include correction orders, warnings and bans on certain activities. Legal proceedings can result in criminal convictions, such as prison sentences or fines.
It is important to note that the CSRD is a directive, so member states have some leeway in defining the penalties for companies that do not comply with the directive, however they must ensure that the penalties are sufficiently effective and dissuasive to ensure real compliance. To date, France has not yet defined the framework for sanctions for non-compliant companies.
